Tag Archives: Sponsorship Research

Two months before competing catamarans are scheduled to set sail in the San Francisco Bay for the 34th defense of America’s Cup, the event seems to be in deep water.

Oracle Team USA’s Cup title defense, following a 2010 victory that was the first for an American team in nearly 20 years, was pegged as a groundbreaking affair that would generate an estimated $1.4 billion in the host the city of San Francisco. The opening weekend of the Louis Vuitton Cup, however, shows little promise for the 2013 rendition of sailing’s finest venture.

The Louis Vuitton Cup is a round-robin tournament featuring global competitors vying for the right to sail against the American team for the America’s Cup crown. Since 1980, between 7 and 13 teams have competed in this preliminary round. This year’s version, however, has only produced 3 competitors: Italy’s Luna Rossa, Sweden’s Artemis Racing and Emirates Team New Zealand. Countries such as France and Spain pulled out of the races, most citing lack of funding as the primary cause.

Following a boycott by the Italian team and an Artemis shipwreck, Emirates Team New Zealand raced to the finish in deserted waters twice over the weekend, earning the first two points of the Cup sailing unopposed. Safe to say, L-V did not fork over $10 million in sponsorship fees for New Zealand to hold open practices on the bay.

After a rough start to the competition, the stylish French retailer and title sponsor is having second thoughts about its initial investment. Hopefully they kept their receipt, because L-V is reportedly looking to receive a $3 million refund due to the poor international showing. Contractually, they are eligible to receive a $1 million refund for every team below six in the tournament. More teams could be on the way out too, leading to an even greater return to Louis Vuitton.

Sponsorship refunds are relatively unheard of, but this year’s America’s Cup may set the precedent for future sponsorship contracts. Frankly, nobody expected the event to be such an epic flop. If an event with as much history as America’s Cup can falter, so can others. Moving forward, the turmoil in the San Francisco Bay will serve as a cautionary tale for prospective sponsors across the board.

Louis Vuitton has been a Cup sponsor for 30 years. Prior to its sponsorship, the teams competing in the preliminary rounds were forced to divide the cost of the event among themselves. Title sponsorship of events rarely leads to such a profound direct impact on the competition as in this case. Louis Vuitton has been a driving force behind the Cup for decades, but their commitment seems to be wavering. Maybe their long-term presence with the event led America’s Cup to feel comfortable enough to include contractual provisions allowing them to get some of the money they fronted returned to them. But if they are able to run away from an unsuccessful sponsorship deal with millions of dollars stuffed back into their designer handbags, other companies may look to follow suit.

It remains to be seen if the Louis Vuitton Cup will prove to be a strange gem in sponsorship history or a frontiersman for protected deals in the future. Either way, a quiet storm is brewing in the city by the bay.

What is your take on the concept of sponsorship refunds? Comment below and give us your thoughts!

A recent USA today article highlights the plight of Olympic aspirants that struggle just to make ends meet. Olympic short-track speedskating hopeful Emily Scott’s story is highlighted. She has seen her monthly direct athlete stipend cut by nearly 70%, forcing her to take on the third-shift at a surgical supply factory and apply for food stamps.

Scott’s predicament is not an isolated one, however, as many other Olympic hopefuls are forced to live paycheck to paycheck. Outside of a few skiers and snowboarders with lucrative sponsorship deals, other winter athletes endure the same kind of financial struggle as Scott. The US Olympic Committee can only do so much for its athletes, and naturally allocates funding to the athletes with the greatest chance of standing atop the podium draped in gold. Other athletes are left to fend for themselves as their direct stipends continue to decrease.

The limited funding the USOC distributes to the lower-profile winter sports provides an ideal opportunity for resourceful sponsorship. Funding sports like speedskating or bobsledding offer potential sponsors a cheaper method of becoming officially affiliated with the Winter Olympics that can do wonders for their public image.

Prior research conducted by Performance Research consistently suggests that companies who fund struggling Olympic teams hit emotional trigger points with consumers that make the venture a worthwhile one. Olympics-related sponsorship is particularly good at generating good will, and companies who fill voids such as this one are viewed as altruistic and patriotic leaders in their field.

US Speedskating currently boasts a 15-member sponsorship roster, but there remains plenty of room for any corporation looking to become an official Olympic sponsor on the cheap. The domestic speedskating governing body has seen the money it receives from the USOC for direct athlete support cut by about $15,000 from last year. This is particularly surprising because speedskating is historically USA’s most successful winter sport. Not only will forthcoming sponsors be perceived as charitable, but their brand will also be associated with athletic success of the highest order.

Before Tuesday, Emily Scott has raised $195 on her crowdfunding site, gofundme.com. Since the USA Today story broke, she has raised $35,498 and counting. This is a testament to just how impactful a new corporate sponsor can be not only to US athletes, but also to consumers across the country. If people are willing to empty their pockets for an Olympic athlete in need, imagine their perception of a company that would do the same.

It is astonishing that additional sponsorship of US Speedskating is yet to emerge. To any companies thinking about pulling the trigger on this type of deal: please fire away! Opportunities like this to generate progressive public sentiment are hard to come by. Our research suggests that you will not regret your decision.

The Performance Research team was busy conducting research at the X Games in LA this summer. The event continues to grow, and sponsorship activations on-site are growing right along with it.

Check out some of our pictures, below, and let us know: did you watch X Games this summer? If you did… did you see the Hot Wheels Double Loop Dare? It’s been getting lots of attention on social media. It was our favorite sponsorship activation by far. The stunt drew huge crowds and follow-up traffic at their X Fest booth. It was a unique and daring way to engage with X Games fans who have a penchant for the unique and daring.